The Home Office – Does Yours Qualify for a Deduction?

“Can I use my home office as a tax deduction? I’m confused on what the limitations are.”

Many people aren’t sure if they qualify for a home office deduction. Unfortunately, checking work emails or occasionally doing work at home does not meet the qualification requirements when you work at a regular office the majority of the time. Let’s take the mystery out of the actual qualifications so that you can get the maximum allowable deduction.

Below are some guidelines to consider before attempting the deduction.

According to the IRS, a portion of your house may qualify for the home office deduction if you meet a few requirements:

It’s your primary workplace. You don’t have a separate office space that you are required to attend from 9 to 5 every day.

It’s used exclusively for work. You don’t use it as a guest room or TV room.

You regularly meet with clients there.

You have a garage or storage area for work related supplies.

Once you determine that your office does qualify, you can calculate the expenses.

There are two types of expenses that go into the calculation: prorated and dedicated. Prorated expenses are for mortgage, insurance, utilities, etc. and can be prorated based on square footage. Dedicated expenses relate to direct expenses such furniture, etc.

Here are some more details as to what is deductible, whether or not your home is used for business:

Deductible Regardless – as an itemized deduction on Schedule A

Real estate taxes

Mortgage interest

Casualty losses

Qualified mortgage insurance premiums

Deductible only if used as a business – Deductible as a business expenses pro-rated for the business use of the home

Homeowner’s insurance

Rent

Repairs and Maintenance

Security System

Utilities and Services

Depreciations (this has limits)

As always, consult with a tax professional such as G2cfo.com to make sure you get the maximum allowable deduction.